Thune seeks to stop TARP spending

Sen. John Thune is trying to build support to end the $700 billion Troubled Asset Relief Program, a move bound to cause heartburn for Democrats wary of strong anti-bailouts sentiment among voters.

Thune, the No. 4 leader in the Republican Conference, plans to introduce a one-page bill Tuesday that would bar Treasury Secretary Timothy Geithner from extending the agency’s authority to spend TARP’s unobligated funds — about $200 billion — beyond the scheduled end date of Dec. 31. The legislation would not affect the bailout funds already handed out to troubled firms such as Citigroup and General Motors.

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Thune told POLITICO that he wants to ensure that remaining TARP funds “don’t get used as a political slush fund and are used actually for a purpose that I think most people in the country would support — and that is to pay down the federal debt.”

Thune also noted that Geithner never responded to his letter inquiring about the administration’s intentions for TARP past the end of the year.

It’s not clear if Thune has any support on the Democratic side for his legislation, but even if he doesn’t, he could use it as a political bludgeon against Democrats who realize that support for the bailout program has waned.

Jim Manley, a spokesman for Senate Majority Leader Harry Reid, said the Thune amendment is “bad policy that is opposed by the administration.”

Geithner has the power to extend the authority to pay out more TARP funds by notifying Congress. Thune, with almost all of his Republican colleagues and one Democratic senator, has written to Geithner twice — first in June, then again in September — to ask that he allow the power to lapse at the end of the year.

Thune already tried to kill TARP with an amendment to the unemployment benefits bill, but Reid managed to block the proposal.

Thune and other Republicans are also upset that Treasury never used TARP for its stated purpose of purchasing toxic assets from the banks and instead allowed the government to take direct ownership stakes in financial firms and automakers.

Thune predicts Reid and other Democrats will continue to fight him.

“It’s a very difficult vote for their members,” Thune said. “It’s something Congress needs to be heard on. This program was a creation of the Congress, and the Congress ought to have a vote whether it gets extended.”

The Senate vote to raise the debt ceiling to $13 trillion is also a prime target for Thune’s effort because the Senate must approve the debt-limit bill before year’s end. Republicans have already indicated they plan to make it as painful an exercise as possible for the Democrats.

The White House signaled last week that it’s considering putting some of the unallocated TARP funds toward deficit reduction, but that’s not necessarily a sign that it will let TARP expire.

“They know that that’s a popular thing to say. ... The president all of a sudden now, because of the poll numbers, is starting to get interested in deficit reduction, but I don’t think for a minute that they have any intention of ending this program,” Thune said.

The support of key conservative groups could help Thune’s campaign gain traction on Capitol Hill. Both Americans for Prosperity and Americans for Tax Reform will send out letters of support Tuesday.

While climate change and health care legislation are top priorities, Americans for Prosperity will be communicating with its 800,000 members on the Thune bill, said Phil Kerpen, the group’s policy director.

“It is an unnecessary and unaccountable delegation of power from the legislative branch, and we’d like to see it sunset on schedule at the end of this year,” Kerpen said.